Reuters:
In the face of downward economic pressure, especially in April, as more cities have tightened anti-pandemic management and control while prices continue to increase, will there be rising stagflation risks? In addition, could you please provide the contribution statistics of the capital formation to as well as imports and exports to the economic growth in the first quarter? Thank you.
Fu Linghui:
I will answer the second question first. Regarding the contributions of the three key demands to economic growth, in the first quarter, the final consumption expenditure contributed 69.4% to GDP and added 3.3 percentage points to GDP growth; the capital formation contributed 26.9% to GDP and added 1.3 percentage points to GDP growth; net exports of goods and services contributed 3.7% to GDP and added 0.2 percentage points to GDP growth.
Regarding the issues of growth and prices that you are concerned about, I introduced the growth previously. Generally speaking, stable economic recovery and growth will be sustained. I would like to respond to the issue of prices. Since the beginning of this year, the price of global bulk commodities has continued to increase, enlarging its impact on our domestic prices. However, in general, China's strong market supply capacities for goods and services have laid a favorable foundation for stabilizing prices. Since the beginning of this year, consumer prices have increased modestly. In the first quarter, CPI increased by 1.1% compared with the same period of last year, slightly higher than that of the first two months. Meanwhile, core CPI increased by 1.2% on a yearly basis, flat with that of the first two months. The rise of CPI in March has slightly expanded as it increased by 1.5% compared with last March and 0.6 percentage points higher than that of February. Among this, the core CPI in March increased by 1.1% compared with last March, equal to that of February. Generally speaking, it demonstrates the following characteristics.
First, the year-on-year decrease of food prices has narrowed. In March, food prices decreased by 1.5% year on year, narrowing by 2.4 percentage points from the previous month's decrease. Among this, the price of pork fell by 41.4%, 1.1 percentage points lower than that of the previous month.
Second, the increase of industrial consumables has expanded. In March, the prices of industrial consumables increased by 3.5% year on year, 0.4 percentage points higher than that of the previous month.
Third, the increase in service prices has slightly decreased. In March, service prices increased by 1.1% year on year, 0.1 percentage points lower than that of the previous month.
The expanding growth rate of CPI in March is mainly attributed to the rising prices of vegetables and energy. Due to the pandemic and the weather, vegetable prices saw a year-on-year increase of 17.2% in March from a year-on-year decrease of 0.1% in the previous month. Domestic energy prices increased by 13.4% compared with the same period of last year, 1 percentage point higher than that of the previous month. The two factors added 1.32 percentage points to the growth of CPI, accounting for nearly 90% of the total increase of CPI.
Judging from the trend, despite the international imported factors and supply pressures of some fresh food in the short term, there are many favorable conditions for the CPI to maintain a moderate rise. In terms of demand, consumption and investment demand are still recovering, with limited influence on driving the price. From the perspective of supply, grain production has scored consecutive bumper harvests, and stocks are abundant; the production capacity of live pigs has generally recovered, the supply of pork is generally sufficient, and prices are still falling. This is because the supply capacity of China's commodity and service market is relatively sufficient. In March, the cost of industrial consumer goods excluding energy was relatively low; the price of services rose by 1.1% year-on-year, and the increase was a 0.1 percentage point lower than the previous month. Meanwhile, the measures to ensure market supply and stabilize prices will continue to be effective, which is also conducive to keeping prices stable. Therefore, there are foundations and conditions for prices to maintain a generally stable and moderate upward trend. Thank you.
